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New U.S. jobless claims rise less than expected

The number of people claiming unemployment
benefits for the first time barely rose last week, after two weeks
of sharp drops, further evidence that layoffs are easing.

The Labor Department said Thursday initial claims for jobless
benefits rose by 1,000 to a seasonally adjusted 434,000 last week.
That's lower than the 447,000 that analysts expected, according to
Thomson Reuters.

The four-week average of claims, which smooths fluctuations,
fell for the 18th straight week to 450,250. That figure is nearing
the roughly 425,000 that many economists say would be a sign the
economy will start creating jobs.

Economists are closely watching initial claims, which are
considered a gauge of the pace of layoffs and an indication of
companies' willingness to hire new workers. As the economy slowly
recovers from the worst recession since the 1930s, more hiring is
critical to boosting workers' incomes and providing the fuel for
increasing consumer spending and further economic growth.

The number of continuing claims dropped 179,000 to 4.8 million,
the department said. But that figure doesn't include an additional
5.4 million people receiving unemployment under federal emergency
programs, as of the week ending Dec. 19, the latest data available.

A total of 10.5 million people were receiving unemployment
benefits that week, an increase of about 300,000 from the previous
week. That increase is partly a result of a decision by Congress in
November to extend benefits for a fourth time since the recession
began. Jobless workers can now receive up to 73 weeks of benefits,
paid for by the federal government, on top of the 26 weeks
customarily provided by the states.

The large number of people continuing to receive benefits
indicates that even as layoffs are declining, hiring hasn't picked
up. That leaves people out of work for longer and longer periods of
time.

The Labor Department will issue a more comprehensive snapshot of
the job market on Friday, when it releases the monthly jobs report
for December. Economists forecast the unemployment rate will rise
to 10.1 percent from 10 percent and employers will have shed 8,000
jobs.

Still, the sharp drop in first-time unemployment claims in
recent months as well as other signs of improvement have caused
some economists to predict small job gains in December. If so, that
would be the first net increase in jobs in two years.

Initial claims have dropped by 100,000, or 19 percent, since
late October.

Some employers are continuing to lay off workers: Defense
contractor Lockheed Martin Corp. said Wednesday that it is cutting
1,200 workers, or less than 1 percent of its work force, as it
combines two electronics systems businesses to save costs. Alcoa
Inc. said it will cut 145 jobs at a plant in Indiana.

Among the states, Pennsylvania reported the largest increase in
claims, with 9,653, which it attributed to layoffs in the
construction, food and transportation industries. Kentucky,
Indiana, Kansas and Ohio had the next largest increases. State data
lags the initial claims data by one week.

California reported the largest drop in claims, with 23,160,
which it attributed to a holiday-shortened work week and fewer
layoffs in the construction and service industries. Texas, Georgia,
Florida and North Carolina had the next largest decreases.